The sas curves shifts to the left as there is a

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prices. The SAS curves shifts to the left as there is a decrease in aggregate supply that is as a result of an increase of input prices. Quality of resources for instance education and technology. When the quality of capital, entrepreneurship, land and labor change, then SAS curve shifts and supply changes. When the quality is improved, there will be an increase in SAS curve. The quantity of resources such as capital, labor, land and entrepreneurship. When the economy has more resources, the short-run aggregate supply curve shifts while the supply decreases. The price of resources that are used as inputs are found in the changes in energy and wages prices. They change the cost of output produced, hence, there are real production changes due to the price level charged for a previous quantity. What is the effect on the aggregate demand curve from an increase in the price level? The increase in the price level makes the aggregate demand curve to slope downward and its due to the following reasons; Indirect effect (interest rate effect). There is a decrease of purchasing power of your money where the price level increases. With this rise, people are forced to carry more money to buy some stuffs, thus, there is high demand on money leading to an increase in interest rates. The aggregate demand will reduce because of less spending of households and businesses. International trade effect (open economy effect). If there is an increase in the domestic goods in connection to the cost of foreign goods, the net exports drop causing the fall of expenditure.
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Direct effect or wealth effect or real balance effect. The rise of price levels leads to the fall of the purchasing power of money. The decrease will lead to the desired consumption decrease which reduces aggregate demand. Give examples of factors that decrease aggregate demand. Which way does the aggregate demand curve shift?
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